The African Growth and Opportunity Act (AGOA), which enables countries in Africa to export over 4000 products, including hundreds of apparel products, quota-free and duty-free to the US, has been benefitting the Chinese textile and apparel companies too.
According to a report ‘The Rise and Fall of Chinese (African) apparel exports’, prepared by the Centre for the Study of African Economies, University of Oxford, a large share of AGOA exports were from Chinese textile and garment companies aimed for the US but transshipped through AGOA countries, with little assembly work done in Africa.
The absence of ‘rules of origin’ in the AGOA has provided an opportunity for Chinese clothing exporters to merely tranship their products, not only by avoiding the heavy export duty to the US under the Multifiber Agreement (MFA), but by benefitting from AGOA preferences, say Lorenzo Rotunno, Pierre-Louis Vezina and Zheng Wang, the authors of the report.
Mr. Lorenzo Rotunno, the lead author, told fibre2fashion, “Chinese apparel exporters can exploit the African route to the US market by relocating part of the supply chain to Africa. AGOA enables the Chinese garment exporters to avoid the existing high trade barriers imposed by the US on apparel imports.”
“The governments of many AGOA countries see the textile industry as a key to the industrial development in the region and have set up Free Trade Zones to attract foreign direct investments,” he informs.
“However, while AGOA will remain fundamental to ensure preferential market access, African countries should identify some key segments of the global apparel production chain where they have a potential advantage and focus on their development, rather than depending on foreign direct investments,” he suggests.
